Thoughts on the US trade deficit report

The chart below was copied from CR.    The trade deficit has shrunk to a level last seen about 10 years ago.  That is good news, as it means that our requirements for financing this deficit have shrunk, and in tandem the current account deficit should have decreased significantly.  Oil will always be a deficit item, but if regulation of futures trading can be enacted, speculative manipulation of oil prices can be eliminated and crude prices will be more reflective of actual supply and demand conditions.

The balance of trade ex-oil could conceivably approach zero depending on the mix of products and services.

TradeDeficitMarch2009

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